Banking Commish Travels on Banker Money

State Financial Institutions Commissioner Greg Gonzales has made 14 out-of-state trips in the past 18 months, receiving about $14,000 in reimbursement for his travel expenses from a department budget financed by the businesses it regulates.
The trips, Gonzales says, are for keeping open lines of communication with other state banking regulators, federal officials and officials in the lending business.
“The more dialogue we can have in the industry, the better, I think,” he said in an interview. “Dialogue is just the key… given the complexity of the regulatory environment and the way it is changing.”
The commissioner, who has held the same position under both former Democratic Gov. Phil Bredesen and current Republican Gov. Bill Haslam, also said that it is inappropriate to state – as the News Sentinel did in a recent overview of gubernatorial cabinet travel – that his trips are at taxpayer expense.
The Department of Financial Institutions develops a budget that is subject to approval of the governor and the General Assembly, as with the rest of state government. But unlike the others, the department then makes an “assessment” of state banks to cover the cost of oversight activities, including audits, during the year. Other regulated industries – credit unions and so-called “payday” lenders, for example – also pay fees intended to cover their share of regulating costs.
“We are self-funding,” he said of the department budget, which is about $8.5 million this year. “It’s not taxpayer dollars.”
But Dick Williams, chairman of Common Cause of Tennessee, both as to frequency – he wonders if there is duplication of information or “overlap in content value” at the various conferences – and the general nature of the arrangement.
“The fact that it’s not direct taxpayer monhy is kind of fungible,” he said. “Anything charge to a bank ultimately gets back to be charged to its customers. It’s not like it’s free money.”
“If state government is looking to a top-to-bottom review on expenses, they ought to look at regulatory fees, too, in addition to direct taxpayer money,” he said. “And maybe he ought to go visit some groups of consumers, too, not only the people who run the banks… to hear the other side of the story.”

Gonzales made nine trips in 2010, while Bredesen was governor. As of June 30, he had made five out-of-state trips with Haslam as governor, more than any other Haslam cabinet member.
His most recent trip was to Palm Beach, Fla., in June for a Tennessee Bankers Association conference, for which he received reimbursement of $1,241. Gonzales was a speaker at the gathering and Tim Amos, vice president and general counsel for the TBA, agreed with the commissioner that such communication is a good thing.
Actually, Amos said, “We invited the governor…(but) he just wasn’t available.”
“At this particular point in time, we’re in a very trying economic-regulatory environment,” Amos said. “”There is a lot of what I would call enhanced bank supervision, a lot of scrutiny… (and) it’s important for us to understand regulatory priorities, the approaches to regulation that change from time to time.”
Amos, who also serves as the TBA’s lead lobbyist at the Legislature, said that more questions might be raised if the organization paid the costs for such a trip.
“I think that would be more of a conflict and would raise more conflict questions, if we were paying him directly to go down there,” Amos said.
“We’re funding the department and it’s up to the department to make a decision on who travels and when and how they are reimbursed,” he said.
Most of Gonzales trips are not to visit with Tennessee bankers but to meet with his counterparts in other states at meetings of the Conference of State Bank Supervisors, which in the past 18 months have been held at locales ranging from Seattle to Okoboji, Iowa.
Gonzales serves on the group’s board of directors and is in line to become chairman. By tradition, one meeting each year is in the president’s home state, so Gonzales hopes to bring the convention to Nashville in two years.
The most frequent destination for Gonzales is Washington and some trips involve meetings with federal officials on banking regulations and related matters. He serves on the Bank Security Act Advisory Group, chairing a subcommittee of the panel that advises federal authorities on security issues. He also visits Washington to meet with other federal officials and the Tennessee congressional delegation.
With financial institutions regulated both by federal and state laws, Gonzales said it is important to have dialogue between officials at both levels.
“We deal with institutions from the standpoint of national policy,” he said. “There is so much changing, it’s challenging just to keep up with it all.”
Tennesseans in general ultimately benefit, Gonzales said.
“We are making sure not only to comply with the law, but to do it in a reasonable way that helps the economy in Tennessee.”

Note: The above is the unedited version of a story running in Thursday’s News Sentinel. There’s a list of the commissioner’s 14 trips in 18 months, with the reimbursement for each, available with the story.

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